Leading indicators continue slow climb

The Conference Board's index of leading economic indicators increased 0.1% in May.

NEW YORK (CNNMoney.com) -- An indicator of the economy's future performance released Thursday edged higher for the third consecutive month.

The index of leading economic indicators, issued by The Conference Board, a business research group, increased 0.1% to 102.1 in May. The interest-rate spread and stock prices made large positive contributions that offset declines in real money supply, consumer expectations and building permits.

According to a consensus compiled by Briefing.com, economists had expected the index to remain unchanged after a 0.1% increase in April.

The index has increased 0.1% each month since March, when it reversed course after a five-month decline.

Lakshman Achuthan, managing director of the Economic Cycle Research Institute, said he does not see the leading index indicates an economic rebound.

"I just don't see a recovery yet from looking at these numbers and at other, longer-lead indicators," said Achuthan, who believes the country is in a mild recession that will last through the year.

Achuthan points out that stock market prices, which contributed to the index increase in May, have fallen about 5% since the end of last month.

Besides stock, positive contributors to the index were the interest-rate spread, manufacturers' new orders for consumer goods and materials, and manufacturers' new orders for nondefense capital goods.

Negative contributors for the month included real money supply, consumer expectations, building permits, index of supplier deliveries and weekly initial claims for unemployment insurance.

In the six-month span ending in March, the index fell 0.7%. Over the past six month, seven of the 10 index components have shown decreases.

"This is not a chorus of components that are moving up," Achuthan said.

The index of leading indicators is designed to forecast turning points in the business cycle.